The U.S. economy demonstrated stronger-than-expected growth in the second quarter, with real GDP increasing by 2.8% quarterly and 3.1% year-over-year. This robust performance was driven largely by significant consumer spending on services.

Inflation indicators also showed notable changes. The GDP deflator, which measures the difference between nominal and real GDP, rose by 2.3%, while nominal GDP increased by 5.2%. These figures indicate a healthy economic expansion, although inflationary pressures remain.

Here’s what five major Wall Street banks are saying about the Federal Reserve’s next moves following this economic data:

Citi: “Fed officials will find some reassurance in the fact that private domestic demand grew by 2.6%, matching Q1’s strength. However, we advise caution against expecting this trend to continue into future quarters. We anticipate a weakening labor market, leading the Fed to cut rates at each meeting starting in September.”

Bank of America (BofA): “This GDP report supports our view that the Fed can afford to be patient, as employment and inflation metrics are more critical. We still expect the Fed to begin cutting rates in December, although recent data suggest a potential shift to September due to signs of cooling in the labor market and returning disinflation.”

ING: “The second half of the year presents more challenges for the economy. With the Fed adopting a more relaxed stance on inflation, we expect increasing focus on economic activity, leading to rate cuts starting in September.”

Wells Fargo: “While this GDP growth surpasses expectations, we believe it may be the highest growth rate we’ll see for the foreseeable future.”

Goldman Sachs: “Following today’s report, we’ve adjusted our June core and headline PCE inflation estimates slightly upward to 0.21% and 0.11%, respectively, translating to year-over-year rates of 2.64% and 2.53%.”